Coverage Action Properly Removed to Hawaii Federal District Court

Greenspon filed a coverage action in Hawaii state court against AIG, Prommis Solutions Holding Corp. (PSHC), and the law firm, McCorriston Miller Mukai and MacKinnon. The action arose from a March 14, 2018 default judgment obtained by Greenspon in a 2014 state court wrongful foreclosure lawsuit against PSHC. AIG was PSHC's insurer, while McCorriston was AIG's legal counsel.

AIG removed the action, asserting complete diversity. Greenspon moved to remand, asserting that complete diversity did not exist, PSHC did not consent to removal, and that his pending state court case was deeply intertwined with this case.

The court found there was complete diversity among properly joined parties. The complaint did not state a claim or theory of liability against the only non-diverse party, McCorriston. At the hearing, Greenspon said he was not attempting to assert a claim against McCorriston, but wished to put them on notice of the claim against PSHC and that there may be a claim of bad faith against AIG. Therefore, the court found that McCorriston was not properly joined.

The court next found that PSHC's consent was not necessary for removal. As with McCorriston, the complaint did not allege any claim or theory of liability against PSHC. Again, Greenspon stated at the hearing that he was merely putting PSHC on notice of the suit. The court found PSHC was also not a properly named defendant. Failure to obtain its consent for removal did not render the removal procedurally defective.

The court next weighted the facts from Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), to determine whether the court should exercise its jurisdiction to assert under the Declaratory Judgment Act. The was no concern about avoiding needless determination of state law issues. The legal issues presented involved the interpretation of a Directors and Officers policy issued by AIG. The case did not require the court to address unsettled issues of state insurance law.

Next, the issue of forum shopping was neutral. Removal of this action to federal court did not constitute forum shopping because there was statutory authority to support the removal based on diversity jurisdiction. Nor did the issue of duplicative litigation bar removal. While Greenspon had other pending state court actions, there were not parallel state court actions that would required the federal court to engage in duplicative litigation.

Greenspon filed a coverage action in Hawaii state court against AIG, Prommis Solutions Holding Corp. (PSHC), and the law firm, McCorriston Miller Mukai and MacKinnon. The action arose from a March 14, 2018 default judgment obtained by Greenspon in a 2014 state court wrongful foreclosure lawsuit against PSHC. AIG was PSHC's insurer, while McCorriston was AIG's legal counsel.

AIG removed the action, asserting complete diversity. Greenspon moved to remand, asserting that complete diversity did not exist, PSHC did not consent to removal, and that his pending state court case was deeply intertwined with this case.

The court found there was complete diversity among properly joined parties. The complaint did not state a claim or theory of liability against the only non-diverse party, McCorriston. At the hearing, Greenspon said he was not attempting to assert a claim against McCorriston, but wished to put them on notice of the claim against PSHC and that there may be a claim of bad faith against AIG. Therefore, the court found that McCorriston was not properly joined.

The court next found that PSHC's consent was not necessary for removal. As with McCorriston, the complaint did not allege any claim or theory of liability against PSHC. Again, Greenspon stated at the hearing that he was merely putting PSHC on notice of the suit. The court found PSHC was also not a properly named defendant. Failure to obtain its consent for removal did not render the removal procedurally defective.

The court next weighted the facts from Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), to determine whether the court should exercise its jurisdiction to assert under the Declaratory Judgment Act. The was no concern about avoiding needless determination of state law issues. The legal issues presented involved the interpretation of a Directors and Officers policy issued by AIG. The case did not require the court to address unsettled issues of state insurance law.

Next, the issue of forum shopping was neutral. Removal of this action to federal court did not constitute forum shopping because there was statutory authority to support the removal based on diversity jurisdiction. Nor did the issue of duplicative litigation bar removal. While Greenspon had other pending state court actions, there were not parallel state court actions that would required the federal court to engage in duplicative litigation.